Great Ideas for your Small Business: Explore Opportunities in Russia
If you want to understand the challenges of doing business in Russia, consider this: Although new ATM machines adorn major boulevards in Moscow, most people are reluctant to use them. Fear of being robbed is one reason, but that’s not all. Until 1997 it was legal to drive your car on the sidewalk. In light of that, what Muscovite in their right mind would line up on the sidewalk in front of an ATM machine?
In addition to impossible traffic jams and crime, Russia’s corrupt politicians, lack of a business infrastructure, and crippling bureaucracy pose real challenges. In 1997, a few weeks after I returned from a five-day trip to Moscow (to speak at a U.S. Agency for International Development–sponsored conference promoting entrepreneurship), this headline appeared in The New York Times business section: “Russia Punishes Eleven Financial Concerns.” The story reported that Russia’s central bank refused to do business with eleven Western financial institutions because apparently they had failed to honor international securities deals.
Chase Manhattan and J.P. Morgan were among the U.S. banks in trouble with the Russians. By the time you read this, the dispute will certainly be resolved, but it illustrates how precarious the Russian economic system is, despite lip service promoting the free market.
No matter how tough it is, doing business in Russia has tremendous appeal to Western entrepreneurs. Since 1993 the Russian Federation, especially modern Russia, has welcomed Westerners and their cash. But wanting to do a deal in Russia and actually doing it are two different stories.
There are myriad roadblocks awaiting the swarms of U.S. businesspeople packing Delta’s daily nonstop flights from New York City to Moscow. For instance, while standing in line waiting to board the flight home, I overheard an engineer from Illinois Power and Light describing how the Russians wanted them to build a desperately needed nuclear power plant. After ten years of work, however, only one cooling tower and a section of one building were complete. The Russians really wanted to do business with the utility, but had no money and apparently were hoping for a barter deal.
A few years ago, Mary Heslin, an American business consultant, opened her Limpopo drop-in daycare center in a suburban Moscow community center to protect herself and her employees from the Mafia. Unlike American day-care centers, her facility has a highly educated staff, including a doctor and an engineer, tending kids and hosting birthday parties.
It took $4,000 and nearly a year to obtain the permits she needed to open the center, but things are going well. She hopes to open more around Moscow.
If you have a product or service that you think will appeal to Russians, start doing your homework now. You can call the U.S. Commerce Department and ask to speak to a trade specialist. The U.S. Agency for International Development also has assistance programs for people wanting to do business in Russia.
Officially, you need an invitation from a Russian firm or individual to obtain a business travel visa. However, there are several U.S.–based companies who can easily facilitate that.
The Russia House in Washington, D.C., for example, needs eight to ten days’ notice, a copy of the first two pages of your U.S. passport, three passport photos, and $195 to provide a one-trip visa.
Do try to arrange for a colleague or the hotel driver to pick you up at the airport. The taxi drivers who greet new arrivals allegedly are mafia-controlled. If you go with them, you risk getting ripped off or worse, a Moscow friend told me.
Here are some resources if you are interested in doing business in Russia: Websites
- American Chamber of Commerce in Russia: www.amcham.ru
- Russian-American Chamber of Commerce: www.russianamer icanchamber.org
- Business Collaboration Center: www.bcc.ru U.S–based business development groups
- Citizen Democracy Corps: 202-872-0933
- Deloitte & Touche is working with USAID on several business development programs: 202-879-5600.